and with squashfs 4.1-3 I get:
------snipp
Filesystem uses unknown compression, this is unsupported by this version
Decompressors available:
gzip
lzma
lzo
-------snapp

unsquashfs -s aptosid.amd64 give a good result

---snipp
Creation or last append time Sat Feb 5 23:58:20 2011
Filesystem is exportable via NFS
Inodes are compressed
Data is compressed
Fragments are compressed
Check data is not present in the filesystem
Fragments are present in the filesystem
Always_use_fragments option is not specified
Duplicates are removed
Filesystem size 775442.21 Kbytes (757.27 Mbytes)
Block size 131072
Number of fragments 6060
Number of inodes 102229
Number of ids 21
----snapp

The message you got "Filesystem uses unknown compression, this is unsupported by this version" is correct. As noted in the release notes this version was built with xz compression. You need a squashfs-tools that supports xz compression which probably means you need one from aptosid until a new version reaches sid.